Correlation Between Stellar Bancorp, and Texas Community

Can any of the company-specific risk be diversified away by investing in both Stellar Bancorp, and Texas Community at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Stellar Bancorp, and Texas Community into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stellar Bancorp, and Texas Community Bancshares, you can compare the effects of market volatilities on Stellar Bancorp, and Texas Community and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Stellar Bancorp, with a short position of Texas Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar Bancorp, and Texas Community.

Diversification Opportunities for Stellar Bancorp, and Texas Community

0.36

Correlation Coefficient

Stellar Bancorp,  Texas Community

Weak diversification

The 3 months correlation between Stellar and Texas is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Stellar Bancorp, and Texas Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Community Banc and Stellar Bancorp, is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Stellar Bancorp, are associated (or correlated) with Texas Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Community Banc has no effect on the direction of Stellar Bancorp, i.e., Stellar Bancorp, and Texas Community go up and down completely randomly.

Pair Corralation between Stellar Bancorp, and Texas Community

Given the investment horizon of 90 days Stellar Bancorp, is expected to generate 1.06 times more return on investment than Texas Community. However, Stellar Bancorp, is 1.06 times more volatile than Texas Community Bancshares. It trades about 0.02 of its potential returns per unit of risk. Texas Community Bancshares is currently generating about 0.01 per unit of risk. If you would invest  2,823  in Stellar Bancorp, on September 18, 2024 and sell it today you would earn a total of  276.00  from holding Stellar Bancorp, or generate 9.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stellar Bancorp,  vs.  Texas Community Bancshares

Stellar Bancorp,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar Bancorp, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Stellar Bancorp, disclosed solid returns over the last few months and may actually be approaching a breakup point.

Texas Community Banc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Community Bancshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Texas Community is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stellar Bancorp, and Texas Community

The main advantage of trading using opposite Stellar Bancorp, and Texas Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar Bancorp, position performs unexpectedly, Texas Community can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Texas Community will offset losses from the drop in Texas Community's long position.

The idea behind Stellar Bancorp, and Texas Community Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.